“A Club Of Coddled Millionaires”: Newt Gingrich Is Obama’s Best Surrogate
The most important figure in Tuesday night’s State of the Union address wasn’t on the House floor. In fact, he hasn’t taken a seat in front of the chamber in 13 years.
But as he campaigned for the Republican presidential nomination in Florida, former House speaker Newt Gingrich was doing more to boost President Obama’s reelection prospects than anything Obama himself could do.
Obama’s address, which marked the unofficial start of his campaign, aimed to take the economic misery that threatens to doom his reelection and turn it into class resentment: the privileged wealthy against ordinary Americans. “We can either settle for a country where a shrinking number of people do really well, while a growing number of Americans barely get by,” he said, in remarks prepared for delivery. “Or we can restore an economy where everyone gets a fair shot, everyone does their fair share, and everyone plays by the same set of rules.”
Gingrich assisted in making this case by helpfully arranging for Republicans to serve as fat-cat foils. The former speaker, whose allies had already branded Mitt Romney a job-destroying “predatory capitalist,” successfully goaded the former Massachusetts governor into releasing tax returns that reveal him to be making millions of dollars per year from investments and paying paltry tax rates — while tucking money in the Cayman Islands, Fannie Mae and Freddie Mac stock and a Swiss bank account. Gingrich exulted Tuesday that the already rich Romney is “getting richer off Fannie Mae and Freddie Mac.”
Romney, suddenly faltering in his bid for the nomination, found himself declaring in Florida on Tuesday that “banks aren’t bad people” — a version of his earlier claim that “corporations are people.” He continued to characterize Gingrich as an “influence peddler,” a tool of K Street and an exorbitantly compensated Freddie Mac lobbyist. Gingrich’s campaign, in turn, answered with the implausible claim that it “can’t find” all of the lucrative contracts the candidate had with Freddie. (Did they look under the sofa cushions?)
Obama strategist David Axelrod couldn’t have arranged it better: On the very day the president tried to turn the campaign into a contest between the 1 percent and the 99 percent, the Republicans launched an all-out war between the Gingrich haves and the Romney have-mores.
A new Washington Post/ABC News poll shows the damage done. Two weeks ago, Romney was viewed favorably by 39 percent of Americans and unfavorably by 34 percent. Incredibly, he is now viewed favorably by only 31 percent and unfavorably by 49 percent. Among independents, who will decide the outcome in November, Romney is viewed unfavorably by a margin of 2-to-1.
By no coincidence Obama has grown in public esteem over that time. His favorable rating is up to 53 percent from 48 percent in December, and his unfavorable rating has dropped to 43 percent from 49 percent.
Gingrich himself remains so unpopular that his own chances of beating Obama seem dim: His 29 percent favorability rating is about where it was before he was dumped as speaker by his House colleagues in 1998. But by making Romney as unpopular as he is, he has made Obama look good by comparison.
Gingrich has long regarded himself as a “transformational figure” in world history, and now he’s about to prove it: For the second time in his career, he is about to reelect a Democratic president.
After he led Republicans to victory in 1994 and became House speaker, his ill-advised standoff with President Bill Clinton led to a government shutdown and allowed Clinton to rebound to an easy reelection in 1996. Now, just two years after Republicans swept to power in the House, Gingrich is again providing a Democratic president with an unexpected path to victory.
To press his Gingrich-given advantage Obama made plans to highlight the “Buffett Rule” and invited to the speech Warren Buffett’s secretary, who supposedly pays a higher tax rate than Buffett does. “Let’s never forget,” Obama said in his prepared text, “millions of Americans who work hard and play by the rules every day deserve a government and a financial system that do the same. It’s time to apply the same rules from top to bottom: No bailouts, no handouts, and no cop-outs.”
But it was hardly necessary for Obama to make the case. Gingrich had already turned the Republican candidates into a club of coddled millionaires.
By: Dana Milbank, Opinion Writer, The Washington Post, January 24, 2012
“Food Stamps” Bigotry Feeds GOP Anti-Government Agenda
Newt Gingrich has rightly earned the derision he’s been getting for his performance last Monday night when he threw red meat wrapped in black skin to South Carolina Republicans who gave Gingrich a standing ovation for calling Barack Obama “the greatest food-stamp president in American history.”
When the master propagandist said President Obama “put” more people on food stamps than any president in American history he was deliberately confusing cause with effect.
Obama “put” no one on food stamps, as the New York Times rightly notes. People did that to themselves when they signed up for food assistance because they were poor, jobless or hungry. And the reason they were hungry was because America is suffering the worst recession since the Great Depression.
Indeed, as former George W. Bush speechwriter David Frum helpfully reminds us, in South Carolina where Newt Gingrich is now slyly insinuating his poison, residents may be hungrier than most since portions of the state suffer the highest poverty and unemployment rates in the nation and where 100,000 households now depend on food stamps for their daily diet.
By waving foods stamps around like the Confederate Battle Flag which flies aloft the South Carolina statehouse, Gingrich is clearly trying to “feed the prejudice of people who already believe that blacks and other poor people don’t really like to work,” argues the Times.
But the facts belie the bigotry since whites far outnumber blacks who receive foods stamps, notes the Times, and where 30% of those depend on food stamps to supplement the income they earn from working.
So, if you’re looking for the logic behind Gingrich’s raising of the food stamp non-issue forget about it, says the Times, because it just isn’t there.
Gingrich’s comments have been singled out for the scurrilous dog-whistle politics they are, and rightly so. But more important than the racially-charged implications of his coded messaging against minorities is the fact that Gingrich’s impugning of food stamps as a collective response to collective suffering is another manifestation of the larger Republican strategy to blame the current crisis entirely on government itself.
Newt Gingrich’ argument that the President of the United States would deliberately “put” millions of Americans on food stamps, like some drug pusher trying to get the public hooked on government the same way addicts get hooked on crack cocaine, is not all that different in its underlying assumptions and premises from the charges global warming deniers level against climatologists who deniers say exploit fears of the earth’s impending doom to grab power for themselves – or to make life miserable for oil magnets Charles and David Koch, whichever comes first.
It turns out the big banks weren’t the only ones whose failures the government bailed out in 2006 and 2008. Conservatives and Republicans, too, discovered that government can be a life-saver.
For, just as banks dubbed “Too Big To Fail” were able to press the government to cover their losing bets with taxpayer money, so too were true-believing conservatives able to target the government as a ready-made scapegoat for their own grievous blunders and so keep intact their blind faith in economic orthodoxies thought to be Too Veritable to Fail.
Be that as it may, never before had a worldview been more thoroughly repudiated than was the infallibility of unregulated markets by the economic calamity of 2008.
That left Republicans with an important choice to make. They could either man up and defend their record and supply-side principles against mounting evidence they had failed. Or, they could oppose everything the in-coming president did or stood for, and thereby take the emergency steps Barack Obama was forced to make to rescue the country from the disasters bequeathed to him by his retreating Republican predecessors and recast them as steps down some nightmarish path as America’s ancient liberties succumbed to a hostile government takeover.
The GOP left no doubt about which fork in the road it intended to take when right out of the gates House Republicans on a unanimous party line vote rejected Obama’s first $780 million stimulus bill at the height of the economic crisis in early 2009. This set the tone for all that has transpired in the preceding three years as Republicans execute their strategy of “blame the government first.”
While Republicans in Congress dig in with their rear-guard action to prevent President Obama from governing except on Republican terms, conservatives outside government are engaged in the task of feverishly rewriting history.
It’s what author Thomas Frank in his new book, Pity the Billionaire, calls “the classic switcheroo.” Republicans have been successful, says Frank, because they’ve been able to lay down a “thick smokescreen of deliberate bewilderment” that replaces real economic fears among middle class families facing job loss and foreclosure with false ones about the impending government takeover of society. It’s a bait and switch tactic being used so that a new villain (the government) can be pushed on stage as target for all those rotten eggs and tomatoes meant for the real villain (Wall Street).
A falsity this vast requires an all-consuming effort to round up and smash any incriminating evidence that might expose the nonsense behind the resurgent Right’s fairy tale for what it is, much like a criminal syndicate does when it ties up loose ends.
And so, says Frank, when the Right refused to accept that the infallibility of “free markets” was a myth, the only other road available to it in 2008 and 2009 was to “declare their true faith in the myth” and then to preserve the delusion by casting out as heretics all those unwelcome reminders conservatism and capitalism had failed — which meant in real life purging from Republican ranks most of the previous generation of people who also called themselves “conservative.”
That is why George W. Bush is a forgotten man and likely to remain a silent one all throughout the 2012 campaign. It is also why so many veteran Republican incumbents were consumed in the purifying fires of the Tea Party or beaten by Tea Party challengers whose single claim on political virtue was that they had virtually no political experience at all.
“Many Americans who had never been politically active, never walked a precinct, never interrupted their golf games, family gatherings or vacations to discuss politics, government or the Constitution were suddenly gripped with the sense that their government, nation and way of life were being stolen from them.”
Listening to that you might think the source of the writer’s worries was the growing concentration of wealth at the top, the theft of our government by Wall Street, the attacks on unions and the right to vote or a Supreme Court that had unleashed an unchecked flood of corporate cash with which to swallow our democracy.
But you’d be wrong. The words above are by right wing Red State blogger Erick Erickson, who gives voice to Tea Party paranoia that providing a lifeline to states to keep teachers in the classroom or cops on the beat or to extend unemployment insurance another few weeks to those who have lost jobs in the worst economic downturn in a century, wasn’t part of the rescue mission we’d expect from any decent government in a crisis like this but was instead a milestone that marked the way as President Obama and lead us down the perilous road to “European-style socialism.”
When Roger Ailes hired Glenn Beck shortly after conservatives were booted from all three branches of government in 2008, he told his new host: “I see this as the Alamo. If I just had somebody who was willing to sit on the other side of the camera until the last shot is fired, we’d be fine.”
Beck’s assignment was to take Barack Obama’s recovery challenge — that by logical implication exposed the Republican Party’s manifest failures with every problem President Obama managed to solve — and to turn that rescue effort into some vast left wing conspiracy to usher in a new “era of socialism.”
We were soon to learn what that assignment meant. Typical was a show aired in March 2010 when Beck said: “Most people will dread economic recessions and depressions. But some people don’t dread them. Some people are a little more opportunistic. They view this as their big chance, a window of opportunity to seize power to fundamentally transform things. They don’t see this as, ‘Oh my gosh, we’re struggling.’ They see this is as, ‘Now is our time.'”
You’ve got to hand it to Republicans. After their worldview collapsed in a pile of rubble around them they did not retreat or take time to rethink the fundamentals of their major premises. Instead, they responded like French Marshal Ferdinand Foch at the First Battle of the Marne when he declared: “Hard pressed on my right. My center is yielding. Impossible to maneuver. Situation excellent. I attack.”
Watching the way the Republican Party pursues power, I’m reminded of another quote, this one from the character Matt Hooper in the Spielberg classic, Jaws, when the marine biologist calls the Great White Shark a “machine” – a machine that does nothing all day but swim and eat and make little sharks. And that’s all.
Republicans today are just that single-minded — and also that ruthless and unsentimental — just like those Manifest Destiny expansionists that historian Robert W. Merry describes as rallying behind President James K. Polk and his war of conquest against Mexico to divest that often tragic country of its American possessions.
Unlike those Northern Whigs like Abraham Lincoln who opposed the Mexican war on moral grounds, or Southern Democrats like John C. Calhoun who opposed it for disturbing the delicate balance of power between slave state and free, Polk’s land-grabbing supporters understood that ethical considerations miss the fundamental truth about history, which Merry says is this: History does not turn on “normal suasion or concepts of political virtue” but instead moves forward “with a crushing force,” based on “differentials of power, will, organization and population.”
And so from the point of view of history, says Merry, the dismemberment of a “weak and dysfunctional” country like Mexico by a “vibrant, expanding and exuberant” democracy like America was not so much justified as inevitable.
These are the narratives and propensities that Newt Gingrich embodies with a vengeance with his dog-whistle references to food stamps that feed not only racist appetites but also the right wing/Fox News survival-of-the-fittest storyline that doing anything to repair the damage Republicans and free market capitalism have wrought — short of applying an even purer and more robust version of unregulated, untaxed capitalism – is nothing more than socialism and so contrary to the American Way of Life.
By: Ted Frier, Salon, Open Salon Blog, January 20, 2012
Newt Gingrich Used Gimmick To Avoid Paying Taxes On Millions In Income
Former House Speaker Newt Gingrich (R) caused a stir during last week’s Republican presidential primary debate when he released his 2010 tax return and revealed that he had paid a 31.5 percent tax rate on $3.14 million in income. The release came amid widespread calls for Gingrich’s fellow candidate, former Massachusetts Gov. Mitt Romney (R), to release his own tax returns, after Romney admitted his tax rate was about 15 percent.
But further scrutiny of Gingrich’s own returns from tax experts has revealed that his tax rate should have been even higher. That’s because, according to Forbes, Gingrich dodged “tens of thousands of dollars in Medicare payroll taxes” by classifying most of his income from two companies he owns as profits and dividends, therefore avoiding the payroll tax — a technique the IRS has “consistently and successfully attacked” in the past. Newt and Callista Gingrich classified only $444,327 of their income from Gingrich Holdings and Gingrich Productions as ordinary income. Meanwhile, the other $2.4 million earned was classified as profits or dividends, meaning it was not subject to payroll taxes.
According to tax experts interviewed by Forbes, that means Gingrich is dodging taxes he likely should be paying:
“It appears that he is not paying his fair share of Medicare tax,’’ Robert E. McKenzie, a partner in the Chicago law firm of Arnstein & Lehr LLP concluded, in an email to Forbes, after reviewing Gingrich’s 2010 tax return. McKenzie, a past chairman of the Employment Tax Committee of the American Bar Association Tax Section and a member of the IRS’ Advisory Council, added: “There are a multitude of cases where the IRS has successfully challenged the improper tax strategy of this candidate and his accountants. Service businesses are only allowed to distribute a fair return on investment from an S corp. as profits exempt from Medicare taxes. The remainder of profits must be paid as salary subject to a 2.9% Medicare tax levy.”
As Forbes notes, the IRS has specific rules on how payments from a small business like Gingrich Holdings should be treated for tax purposes, and the amount Gingrich says he invested in his companies — between $500,000 and $1 million — is likely “far too little” to “justify booking $2.4 million as profit.” The ploy, however, is used widely. According to the Government Accountability Office, S corps. like Gingrich Holdings underpaid wages by $24 billion in 2003 and 2004, allowing owners to avoid payroll taxes.
Gingrich’s dodge of Medicare taxes, though, pales in comparison to the tax break he’d give himself should he get to the White House. His tax reform plan calls for a flat 15 percent tax rate, slashing his effective rate to 14.6 percent and giving himself a $540,000 tax break in the process.
By: Travis Waldron, Think Progress, January 23, 2011
Newt Gingrich And South Carolina Were Made For Each Other
Hot-headed South Carolina and former House Speaker Newt Gingrich are made for each other. The state first to secede from the Union about 150 years ago remains defiant, mischievous, and unreconstructed. Not all states are created equal.
South Carolina, shall we say, made its name early as the troublemaker. To this day, it doesn’t like to fall in line and sends elected representatives to Washington cut from that cloth. Down home in Charleston, men especially still brag on the firing on Fort Sumter, the shots and blockade that started the Civil War. Very nice.
So natch Newt Gingrich won the South Carolina Republican presidential primary over the front-runner, former Gov. Mitt Romney. There was no way the most viciously verbose and confrontational politician in our time was not going to win over the weekend. Just like the confident, beautiful people of the New England Patriots were going to see their football team beat the sincere, scrappy Baltimore Ravens, any which way. Gingrich’s victory was destined by the order of the political court.
The 243,398 Republicans who voted for Gingrich in the Palmetto State gave him the first statewide win of his life. Remember, the former speaker only ever faced voters in a congressional district in Georgia. He is not necessarily a man of the people, no matter what the South Carolina verdict. Not that I care, but Romney does not need to fear the writing on the wall yet.
Gingrich, like his new best friend state, is an outsider of the establishment. Gingrich, like South Carolina, home to the the Citadel, likes starting the political equivalent of war, although he never did military service. Gingrich, like South Carolina, is steeped in history which each are capable of entirely misreading and handing down like lore.
A few facts on Gingrich’s own history. As House speaker, he was awed by President Clinton’s political prowess and brilliance, as Washington Post associate editor David Maraniss pointed out on Sunday’s Post op-ed page. He knew he had met more than his match. Later in Clinton’s presidency, he masterminded the House impeachment strategy, carried out by then-Rep. Henry Hyde, that nearly doomed Clinton’s fate. The Monica Lewinsky affair was only a vehicle. No moral umbrage was involved, as we now know Gingrich was then having an affair with an aide on the Hill, now his third wife Callista Gingrich.
Vengeful hypocrisy still cuts deep. If Gingrich had his way, Clinton would be as gone as the good King Duncan in Macbeth. Sen. Lindsay Graham, then a South Carolina congressman, was one of Hyde’s dozen helpers. This was only over a dozen years ago, but it seems like “history” we have forgotten. That’s what Gingrich is counting on when he talks about God’s forgiveness and “despicable” debate queries. That’s what columnists forget when they write that Whitewater prosecutor Kenneth Starr was solely responsible for the whole tragic circus.
Some more history on South Carolina. When the greats gathered in a room to invent the Republic and its rules, South Carolina’s men were most adamant about protecting slavery as an institution. That was formative fruit on the tree since. A South Carolina congressman caned a Massachusetts senator for his abolitionist views on the Senate floor before the Civil War broke out. As noted, they were first to fight “the Yankees” and call themselves another country. Over much of the 20th century, the stubborn Strom Thurmond of South Carolina made an indelible mark as an arch-segregationist, a senator, and a presidential candidate. Former Sen. Ernest Hollings, the bright and capable junior senator with the low country in his voice, was thankfully a reminder of the good men and women from that state.
The Confederate flag has flown over South Carolina for too long. Not only up in the air but in the hearts of men. Gingrich won in a state that is, in a sense, another country.
By: Jamie Stiehm, U. S. News and World Report, January 23, 2012
Newt Gingrich: “So Busy Serving His Country That He Had To Cheat The Government To Save The Government”
While candidate Gingrich has been busy focusing on the tax return failings of his opponent, Governor Mitt Romney, a report by Forbes’ Janet Novack suggests that, once again, Newt may be using a good offense to keep from having to play some serious defense when it comes to his own failure to pay up on his tax obligations.
According to Novack, “Newt Gingrich avoided tens of thousands of dollars in Medicare payroll taxes in 2010 by using a technique the Internal Revenue Service has consistently and successfully attacked.”
Gingrich’s primary source of income, as revealed on the one tax return he has disclosed, comes from two “S” corporations owned by Newt and his wife, Callista. S Corporations are employed as a means to allow money to ‘flow through’ to the shareholder-owner as if it were a sole proprietorship or partnership, thus avoiding taxation at both the corporate level and re-taxation at the personal level.
It is a perfectly kosher way to do business.
However, according to the law, such corporations are supposed to pay out most of its earnings as direct payments to the owner/shareholder rather than as profits or dividends which are exempted from certain tax obligations— such as the 2.9 percent of earnings which are to be paid to Medicare.
As stated on the IRS website
Reasonable Compensation
S corporations must pay reasonable compensation to a shareholder-employee in return for services that the employee provides to the corporation before non-wage distributions may be made to the shareholder-employee. The amount of reasonable compensation will never exceed the amount received by the shareholder either directly or indirectly.
Distributions and other payments by an S corporation to a corporate officer must be treated as wages to the extent the amounts are reasonable compensation for the service rendered to the corporation.
The key to establishing reasonable compensation is determining what the shareholder-employee did for the S corporation. As such, we need to look to the source of the S corporation’s gross receipts.
The three major sources are:
1. Services of shareholder,
2. Services of non-shareholder employees, or
3. Capital and equipment.
There is little question that the revenues flowing through Gingrich’s companies are the direct result of the services provided by Newt and his wife, whether by way of speaking fees, book royalties, film productions, etc. Thus, it would be reasonable to expect that the preponderance of revenue coming into the Gingrich corporations would pass through directly to Mr. and Mrs. Gingrich and be subject to taxes such as the Medicare tax.
Yet, in 2010, the Gingrich corporations paid out $444, 327 as salary to Newt and Callista while reporting some $2.4 million as profit or dividends – thus allowing the Gingrichs to avoid paying the 2.9 percent Medicare tax on the bulk of their earnings.
Of course, now that Gingrich is running for president, it is unlikely the IRS will come after him as he would simply call it an attack by the Obama administration.
And while there will, no doubt, be an agreement between Romney and Gingrich not to ‘go there’ – as both are now likely to be vulnerable on their respective tax returns—expect Rick Santorum to make a fuss unless he too turns out have some tax issues.
Personally, I can’t wait to hear Newt find a way to blame this on the media.
Or maybe he’ll tell us that he was so busy serving his country that he had to cheat the government in order to save the government.
By: Rick Ungar, Contributing Writer, The Policy Page, Forbes, January 23, 2012
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